Welcome Guest [Log In] [Register]


Reply
Venezuelans Give Up on Counting Piles of Cash and Start Weighing Them
Topic Started: 1 Nov 2016, 12:55 PM (595 Views)
Rufus
Member Avatar


Venezuelans Give Up on Counting Piles of Cash and Start Weighing Them
LINK

At a delicatessen counter in eastern Caracas, Humberto Gonzalez removes slices of salty white cheese from his scale and replaces them with a stack of bolivar notes handed over by his customer. The currency is so devalued and each purchase requires so many bills that instead of counting, he weighs them.
“It’s sad," Gonzalez says. "At this point, I think the cheese is worth more.”

It’s also one of the clearest signs yet that hyperinflation could be taking hold in a country that refuses to publish consumer-price data on a regular basis. Cash-weighing isn’t seen everywhere but is increasing, echoing scenes from some of the past century’s most-chaotic hyperinflation episodes: Post-World War I Germany, Yugoslavia in the 1990s and Zimbabwe a decade ago.

“When they start weighing cash, it’s a sign of runaway inflation,” said Jesus Casique, financial director of Capital Market Finance, a consulting firm. “But Venezuelans don’t know just how bad it is because the government refuses to publish figures.”

Once one of the world’s strongest currencies, the bolivar has been reduced to a nuisance. Basic purchases require hundreds of bills. Shoppers shove piles of them into gym bags before venturing into crime-plagued streets and shopkeepers stash thousands in boxes and overflowing drawers. In the absence of official data, economists are left to guess what the inflation rate is. Estimates for this year range from 200 percent to 1,500 percent.
For a QuickTake explainer on Venezuela’s economy, click here.

Until now, as the bolivar sank, the government declined to print bigger-denomination bills. The 100-bolivar note -- the nation’s largest -- is worth less than a dime. 

A few weeks ago, however, the government quietly asked five currency companies to submit bids for bigger bills -- 500, 1000, 5000, 10,000 , and perhaps a 20,000-bolivar note, according to someone with direct knowledge of the order.

The request is for the bills to be ready in time for Christmas bonuses. Normally such an order takes four to six months and so far no tender has been awarded. To minimize time and cost, the government is considering swapping only the color, not the design, of existing bills, and adding zeros, the person said. The Central Bank said it had no comment.

‘Raising the White Flag’
Steve Hanke, an economist at Johns Hopkins University, said re-denominating banknotes is “raising the white flag. No one wants to do it, but eventually their hand gets forced.”
 
For now, many Venezuelans live a kind of paradox: they are awash in cash but can rarely afford to buy anything.
In truth, even getting hold of enough legal tender has become an ordeal. Before embarking on their shopping odysseys, weary consumers face long waits at the bank where dwindling numbers of cash machines have strict limits. 

Data from the Central Bank show that despite the increased need for bank machines, their numbers have been declining. And whereas only two years ago a typical ATM was restocked every few days, now it occurs every few hours. In addition, many small towns have no machines at all and some 40 percent of the population have no bank accounts, according to Casique.

Permanent Bottleneck
Many, like Jose Marcano, a 26-year-old office messenger, find themselves caught in a permanent bottleneck. Marcano spends hours each week depositing his employer’s cash which he carries in black plastic bags on his motorbike. When he can’t make it to an ATM, he flies through stop signs and traffic lights, afraid of getting robbed.

“Carrying this amount of cash is incredibly dangerous,” he said while feeding stacks of bolivars into an ATM. “You put your life at risk.”
While there are credit and debit cards in Venezuela, government data show that more than a third of the labor force is informal, meaning they mostly work for cash. That includes taxi drivers, street hawkers and a slew of service jobs. In addition, state pensions to the elderly are generally paid in cash.

Authorities have recently taken a small step to ease the cash crunch, allowing consumers to use bank cards to withdraw legal tender from convenience stores and pharmacies.

Feeling Like Pablo Escobar

Many say that will only saddle Venezuelans with even more bills until authorities print higher denominations.

Meanwhile, people like Bremmer Rodrigues, 25, who runs a bakery on Caracas’ outskirts, are at a loss over what to do with their bags of bills. Every day his business takes in hundreds of thousands of bolivars, which he hides around his office until packing them up in boxes to deposit at the bank. He says if someone looked in on him, he might be mistaken for a drug dealer.

“I feel like Pablo Escobar,” he said. “It’s a mountain of cash, every day more and more.”

Edited by Rufus, 1 Nov 2016, 12:57 PM.
Take risks - if you win you will become wealthy, if you lose you will become wise
Profile "REPLY WITH QUOTE" Go to top
 
stinkbug
Member Avatar


Must suck to be a saver over there...
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

Profile "REPLY WITH QUOTE" Go to top
 
1 user reading this topic (1 Guest and 0 Anonymous)
ZetaBoards - Free Forum Hosting
Join the millions that use us for their forum communities. Create your own forum today.
Learn More · Sign-up for Free
« Previous Topic · Australian Property Forum · Next Topic »
Reply



Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.

Forum Rules: The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.

Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.

Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.

This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.

For more information go to Limitations on Exclusive Rights: Fair Use

Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ

Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy